Finland

As a member of the European Union (EU), Finland is subject to the accounting, auditing, and financial reporting requirements established in EU Regulations and Directives as transposed into national law. Finland has aligned its legal framework with the EU acquis communautaire as it relates to accounting and auditing.

Accounting Framework

In Finland, the Accounting Act (1620/2015) stipulates the requirements for the preparation of financial statements, including applicable accounting standards and financial reporting thresholds consistent with European Commission (EC) Regulations. Authority to set accounting standards rests with the Ministry of Economic Affairs and Employment.

The Finnish Accounting Board, operating within the Ministry, is responsible for developing accounting legislation and related guidance. The Accounting Act establishes the requirements for the preparation of corporate financial statements and specifies whether entities must apply EU-endorsed IFRS or Finnish Generally Accepted Accounting Principles (Finnish GAAP), depending on their size and nature.

Application of EU-endorsed IFRS is required for the consolidated financial statements of public interest entities (PIEs), defined as listed companies, credit institutions, and insurance companies, including pension institutions. EU-endorsed IFRS are also required in separate financial statements of companies whose securities trade on a regulated market but that do not prepare consolidated financial statements. Entities not required to apply IFRS follow Finnish GAAP. Simplified reporting requirements apply to small-sized entities meeting specified size thresholds.

Auditing Framework

The Auditing Act (1141/2015) governs the provision of statutory audit services and sustainability assurance services in Finland. The Act requires that audits be conducted in accordance with international auditing standards as adopted by the European Commission. In practice, International Standards on Auditing (ISA) as translated and published by Suomen Tilintarkastajat ry are applied pending formal endorsement at the EU level.

The Auditing Act authorizes the Audit Oversight Unit (AOU), operating within the Finnish Patent and Registration Office, to regulate the audit profession. The AOU is responsible for licensing and registration of auditors and audit firms, organization of professional examinations, oversight of continuing professional development, quality assurance reviews, enforcement, and general guidance related to auditing standards.

The Act establishes four auditor qualifications: HT (basic qualification), KHT (authorization to audit public interest entities and larger entities), JHT (authorization to audit public administration and public finance), and KRT (special qualification for sustainability reporting auditors). The inclusion of the KRT qualification reflects the expansion of statutory responsibilities to sustainability assurance engagements.

All companies are required to have an annual statutory audit unless they meet size-based exemption criteria. Companies whose primary activity involves holding securities and exercising significant influence over another entity are required to appoint an auditor regardless of size.

In Finland, only the provision of statutory audit and sustainability assurance services is regulated by law. The Ministry of Economic Affairs and Employment is responsible for developing audit legislation.

The Auditing Act (1141/2015) governs the regulation of auditors and audit firms. The Act establishes provisions on rendering statutory audit and sustainability assurance services, sets initial professional development (IPD) and continuing professional development (CPD) requirements, and authorizes the Audit Oversight Unit (AOU) to regulate the audit profession.

The AOU operates within the Finnish Patent and Registration Office and is responsible for oversight of auditors and audit firms, including enforcement; licensing and registration; organization of professional examinations; oversight of professional competence and continuing education; quality assurance inspections; general guidance and development of auditing standards; and international cooperation and exchange of information.

The following auditor qualifications are regulated by law:

The HT qualification serves as the foundational qualification for the provision of statutory audit services. Individuals who pass the HT examination may further specialize by obtaining additional qualifications.

The KHT qualification authorizes auditors to perform audits of public interest entities and larger entities.

The JHT qualification authorizes auditors to conduct audits of public administration and public finance.

The KRT qualification authorizes auditors to perform sustainability reporting assurance engagements. The introduction of the KRT specialization reflects the expansion of statutory responsibilities to sustainability assurance services under the Auditing Act.

To be approved as an HT auditor, candidates must meet prescribed education and practical experience requirements and pass a professional examination administered under the authority of the AOU. Additional examinations and experience requirements apply for the KHT, JHT, and KRT specializations.

The use of protected professional titles is restricted by law to individuals registered with the AOU. Only authorized auditors holding a valid license may provide statutory audit or regulated sustainability assurance services.

Other accountancy professionals, including those working in business, industry, academia, or the public sector outside statutory audit roles, are not subject to statutory regulation unless they hold one of the regulated audit qualifications.

The Audit Oversight Unit (AOU), established by the Auditing Act (1141/2015), centralizes and consolidates the responsibilities of the previous public oversight authorities which have been abolished: the Auditing Board of the State, the Auditing Board of the Central Chamber of Commerce, all 14 Auditing Committees of the regional Chambers of Commerce, and the Auditing Board of Public Sector Auditors.

The AOU is located within the Finnish Patent and Registration Office, and is responsible for the general direction, development, and oversight of auditors. Its responsibilities include: (i) oversight of auditors and audit firms, including enforcement duties; (ii) certification and registration of auditors and audit firms; (iii) organization of professional examinations; (iv) oversight of auditors´ professional competence, continuous education and maintenance of qualifications; (v) quality assurance and oversight of inspections of auditors and audit firms; (vi) general guidance and development of auditing standards; and (vii) international cooperation and exchange of information.

The AOU is a member of the International Forum of Independent Audit Regulators.

Suomen Tilintarkastajat ry is a voluntary membership organization uniting Authorized Public Accountants, Authorized Auditors, and Public Sector Auditors in Finland since April 2014. All its members are certified by the Audit Oversight Unit (AOU) in accordance with the Auditing Act No. 1141 of 2015. Suomen Tilintarkastajat ry is involved in the training of auditors through a voluntary preparation program that it administers. It also conducts continuing professional development; requires its members to adhere to the IESBA Code of Ethics as issued by IESBA; and conducts investigation and disciplinary processes for its members.

The association was formed as a result of a merger between two audit institutes, KHT-yhdistys and HTM-tilintarkastajat, which have integrated their operations into one association. Over 90% of all auditors from the former KHT and HTM audit institutes have joined since the merger.

The association supports its members in the performance of high quality-work and helps them meet ethical and professional requirements by developing sound auditing practices including the promotion of good accounting and financial reporting standards. The association also develops and strengthens the skills of its members by providing education, information on current industry issues, and opportunities for professional dialogue and networking. Suomen Tilintarkastajat ry also owns ST-Akatemia Oy, a limited liability company which specializes in training and development for accounting professionals.

In addition to being a member of IFAC, the association is a member of Accountancy Europe and the Nordic Federation of Public Accountants.

In Finland, a mandatory quality assurance (QA) review system is established under the Auditing Act (1141/2015), which authorizes the Audit Oversight Unit (AOU) to design and operate the QA review framework. The system applies to all statutory audits and covers both public interest entities (PIEs) and non-PIEs.

The AOU is responsible for establishing the scope and procedures of inspections, appointing independent reviewers, processing inspection results, and determining follow-up actions. All inspection results and reports are approved by the AOU.

The QA review system incorporates the requirements of SMO 1 and operates in accordance with the International Standards on Quality Management (ISQM 1 and ISQM 2) and other relevant IAASB pronouncements as adopted for application in Finland. The system is operational for all mandatory audits and is linked to the investigative and disciplinary framework through the Audit Board.

Suomen Tilintarkastajat ry reports in its SMO Action Plan that the QA review system in Finland fulfills the requirements of SMO 1

Current Status: Adopted

Initial professional development (IPD) and continuing professional development (CPD) requirements for auditors, the only regulated segment of the accountancy profession in Finland, are established in the Auditing Act (1141/2015) and further detailed through Ministry Regulation No. 1442/2015. The Audit Oversight Unit (AOU) is responsible for conducting professional examinations, maintaining the register of authorized auditors, and overseeing compliance with qualification and CPD requirements.

To qualify as an HT auditor, candidates must meet prescribed university-level education requirements or demonstrate extensive relevant experience, complete specified studies in accounting and law, obtain practical experience, and pass a professional examination. Additional examinations and experience requirements apply for the KHT, JHT, and KRT specializations.

Continuing professional development requirements mandate completion of 120 hours over a rolling three-year period, including a minimum annual requirement and a defined proportion of verifiable learning. CPD must cover auditing and assurance engagements, accounting, company law, taxation, and, where applicable, public sector or sustainability topics.

These requirements apply to authorized auditors only. Other professional accountants working in business, industry, academia, or the public sector are not subject to statutory education regulation.

While the education and CPD framework incorporates core elements of the International Education Standards, full alignment with the most recent IES in effect as of the time of the assessment has not been formally demonstrated for all categories of professional accountants.

Current Status: Partially Adopted

The Auditing Act (1141/2015) specifies that audits must be carried out in according with the international auditing standards as adopted by the European Commission (EC). In Finland, the legal adoption of the International Standards on Auditing (ISA) issued by the IAASB is pending upon the endorsement of EC on a European level. De facto, ISA as translated by the Suomen Tilintarkastajat ry are being applied.

Complete translations of the 2018, 2020, and 2021 Handbooks of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements have been finalized and issued in Finnish. Revised standards such as ISA 315 (Revised 2019), ISRS 4400 (Revised), and the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) have also been completed and published.

At the time of assessment, translation of the 2022 Handbook and ISA 570 (Revised 2024), Going Concern, remains in progress.

Current Status: Partially Adopted

In Finland, only Authorized Public Accountants / Keskuskaupparakamin Hyväksymä Tilintarkastaja (KHT), Authorized Auditors / Kauppalamarin Hyväksymä Tilimies (HT), and Public Sector Auditors / Julkishallinnon Tilintarkastaja (JHT) are subject to ethical requirements, which are established in the Auditing Act No. 1141 of 2015.

Suomen Tilintarkastajat ry reports that while the law does not directly refer to the IESBA Code of Ethics, the requirements incorporate elements from the Handbook of International Code of Ethics for Professional Accountants (although the version remains unclear).

In addition to the requirements stipulated by law, the association requires its members, who join on a voluntary basis, to adhere to the IESBA Code of Ethics. It has adopted and translated the 2023 version of the IESBA Handbook of the Code of Ethics for Professional Accountants.

Current Status: Partially Adopted

Public sector accounting requirements in Finland are established through the Budget Law (423/1988) and related statutes for central government entities, and through the Local Government Accounting Act (410/2015) for municipalities and local government entities.

The Treasury under the Ministry of Finance is responsible for establishing central government accounting requirements, while the Local Government Sub-Committee of the Accounting Board of the Ministry of Economic Affairs and Employment specifies accounting rules for local governments.

Public sector accounting in Finland is conducted on an accrual basis. The national standards are reported to be largely aligned with International Public Sector Accounting Standards (IPSAS), particularly at the municipal level. However, IPSAS have not been formally adopted or incorporated into national legislation.

Finland supports the development of European Public Sector Accounting Standards (EPSAS), and no formal plans to adopt IPSAS in their entirety have been reported. Since accrual-basis national standards, rather than IPSAS in their entirety, are applied for public sector entities, the jurisdiction is assessed as Partially Adopted.

Current Status: Partially Adopted

The Auditing Act (1141/2015) establishes the Audit Oversight Unit (AOU) as the statutory authority responsible for the investigation and discipline of authorized auditors in Finland. Auditors constitute the only segment of the accountancy profession subject to statutory regulation in the jurisdiction.

The AOU is empowered to initiate investigations, impose administrative sanctions, and take disciplinary measures in cases of non-compliance with professional standards and legal requirements. An Audit Board operating within the oversight framework makes autonomous decisions on administrative sanctions in accordance with the Act.

Suomen Tilintarkastajat ry reports that the investigative and disciplinary system administered by the AOU is operational and aligned with the requirements of SMO 6

In addition, although not required by law, Suomen Tilintarkastajat ry has established an Ethical Board to monitor compliance by its voluntary members with ethical requirements and the association’s constitution. This mechanism operates alongside, but does not replace, the statutory investigative and disciplinary framework.

As the statutory I&D system applies to all regulated professional accountants in Finland and is operational, the jurisdiction is assessed as Adopted

Current Status: Adopted

The Ministry of Economic Affairs and Employment is responsible for accounting legislation in Finland. The Accounting Act (1620/2015) transposes the European Commission Accounting Directive (2013/34/EU) and implements the EU IAS Regulation (1606/2002).

In accordance with the EU IAS Regulation, EU-endorsed International Financial Reporting Standards (IFRS Accounting Standards) are required for the consolidated financial statements of public interest entities (PIEs). PIEs include listed companies, credit institutions, and insurance undertakings.

The Accounting Act also requires EU-endorsed IFRS for the separate financial statements of companies whose securities trade on a regulated market but that do not prepare consolidated financial statements because they have no subsidiaries.

Entities that are not required to apply EU-endorsed IFRS prepare financial statements in accordance with Finnish Generally Accepted Accounting Principles (Finnish GAAP).

IFRS Accounting Standards are therefore required for application by all domestic publicly accountable entities in consolidated general purpose financial statements.

IFRS for SMEs is not adopted in Finland, and no current plans to adopt them have been reported.

Current Status: Adopted

Relevant Organizations

• Suomen Tilintarkastajat ry
• Audit Oversight Unit, Finnish Patent and Registration Office
• Ministry of Employment and the Economy

Relevant Legislation

• Accounting Act No. 1620, 2016
• Auditing Act (1141/2015)
• Act on Chartered Public Finance Auditors No 467,1999

Relevant Publications

• Accountancy Europe, Definition of Public Interest Entities in Europe - Accountancy Europe, 2017.
• Accountancy Europe, Structure and Organisation of the Profession: Key Features – 2020 Update, October 2020
• Accountancy Europe, Organisation of the public oversight of the audit profession in 30 European countries, 2020.
• Bellanca, S., and Vandernoot, J., “International Public Sector Accounting Standards (IPSAS) Implementation in the European Union Member States,” Journal of Modern Accounting and Auditing, March 2014.
• Deloitte & Touche, IPSASs in Your Pocket, 2013.
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Finland,” 2018.
• International Forum of Independent Audit Regulators, IFIAR 2021 Member Profile, 2021.
• Suomen Tilintarkastajat ry, SMO Action Plan, July 2021.